What you need to know about before buying your dream holiday home
The allure of owning a holiday home, a sanctuary away from the hustle and bustle of daily life, is undeniable. With the increasing flexibility of remote working and an emphasis on work-life balance, the dream of having a retreat in your favourite holiday town is more achievable than ever. At Hammond Pole Attorneys, we rounded up some crucial tips to guide you through the process.
- Evaluating Your Budget
Investing in a holiday home is a significant financial decision. It’s crucial to assess the property market trends and interest rate fluctuations. Researching the area of interest is key – understanding the appreciation of property values in the neighbourhood can give you an insight into your investment’s future worth. Remember, costs such as furniture, utilities, taxes, and levies also play a part in your budget planning.
- Rental Considerations
If your holiday home is also a potential source of rental income, it’s important to research the local demand for holiday rentals. Consider the seasonal variations in rental demand and check with local regulations or body corporate rules regarding short-term rentals. Aligning your personal holiday times with off-peak rental periods can maximise your investment returns.
- Location Matters
When choosing the location of your holiday home, think about the frequency and type of your visits. Do you prefer a nearby getaway for weekends or a distant retreat for longer vacations? Proximity to beaches, rivers, shopping, and dining areas can enhance your experience and also appeal to potential renters. If your preferred locations are financially out of reach, explore emerging areas that offer more affordable options.
- Visiting Off-Season
To fully understand the year-round appeal of your prospective holiday home, visit the area during different seasons. This helps in assessing whether the location suits your lifestyle and business needs throughout the year.
- Security Considerations
Security is paramount, especially if your holiday home will be unoccupied for extended periods. Properties in secure developments offer the advantage of maintenance and security, though they may have restrictions on short-term rentals. Engaging with local estate agents and residents can help you gain insight the safety of your chosen neighbourhood.
For those considering property investment from abroad, it must be noted that while foreign investors can purchase property in South Africa, certain financial nuances apply. Should a property not be purchased outright, banks will normally only provide a 50% bond, which means that a 50% deposit would be required. Additionally, when selling the property, taxation factors come into play, impacting the sale.
As for South African homeowners eyeing an additional property, securing a bond is crucial if cash purchase isn’t viable. The loan amount granted by the bank will be dependent on the buyer’s credit profile. When the homeowner decides to sell the property, they should keep in mind that the sale of this property will be subject to capital gains tax.
Always remember that embarking on the search for your perfect holiday home should be an enjoyable and well-informed process. As legal professionals, Hammond Pole Attorneys are here to ensure that your investment is not only a source of joy but also a sound decision legally and financially. Happy house hunting!
For more information, contact Hammond Pole Attorneys
Ardené Nel – ArdeneN@hammondpole.co.za